Advanced Flower Capital Inc. (AFC) reported significant financial performance improvements in its latest 10-Q filing for the quarter ending June 30, 2026. The company generated total investment income of $8.7 million for the quarter, a rise of approximately 8% compared to $8.1 million in the same period last year. For the first half of 2026, total investment income reached $18.5 million, up 12% from $16.5 million in the first half of 2025. The net investment income for the quarter was $3.5 million, translating to $0.15 per share, while the net increase in net assets resulting from operations was $5.4 million, or $0.23 per share.
The company’s total assets increased to $399.7 million as of June 30, 2026, compared to $275.6 million at the end of 2025. This growth was primarily driven by an increase in cash and cash equivalents, which rose to $106.5 million from $38.6 million. The company’s liabilities also increased, totaling $212.4 million, largely due to a rise in borrowings under its revolving credit facility, which stood at $110 million as of June 30, 2026, compared to $21 million at the end of 2025. The net asset value per share increased to $8.25, reflecting a positive trend in the company's financial health.
Strategically, AFC transitioned to a business development company (BDC) effective January 1, 2026, allowing it to broaden its investment mandate beyond the cannabis sector to include a wider range of debt and equity investments. The company has also formed wholly-owned subsidiaries to facilitate its investment activities. During the first half of 2026, AFC funded $98.1 million in new loans and received approximately $51 million in principal repayments, indicating active engagement in its lending operations.
Operationally, AFC's portfolio consisted of 17 loans with a fair value of $289.8 million as of June 30, 2026. Approximately 59% of these investments bore interest at a floating rate, which helps mitigate interest rate risk. However, 22.7% of the portfolio was on nonaccrual status, indicating potential credit risk. The company’s management has indicated that it will continue to monitor the legal landscape surrounding its investments, particularly in the cannabis sector, to mitigate risks associated with regulatory changes.
Looking ahead, AFC remains optimistic about its growth trajectory, supported by its strong liquidity position and the ability to leverage its credit facilities. The company plans to continue expanding its investment portfolio while managing risks associated with interest rates and credit quality. The management's focus on maintaining compliance with BDC regulations and optimizing its capital structure will be crucial for sustaining its operational and financial performance in the coming quarters.
About Advanced Flower Capital Inc.
Advanced Flower Capital Inc. is a Maryland-based institutional lender specializing in senior secured loans to cannabis operators in states with legalized cannabis. With a focus on providing capital to a capital-constrained market, the company aims to deliver attractive risk-adjusted returns through its loan portfolio. Following a recent spin-off of its commercial real estate assets, AFC is well-positioned to capitalize on the growing demand for financing in the cannabis industry.
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